Small-scale and cottage industries (SSMI) have received a considerable amount of attention in development strategies and policies in many countries. One of the main arguments in favour of small scale production is its potential to create employment, as it uses more labour per unit of output....

We develop an equilibrium job search model in which employees incur endogenous commuting costs. This model leads to the following conclusions:1.Firms partially compensate workers for the incurred commuting costs.2.When workers have more bargaining power, they will receive less compensation for...